Fintech services sector rushes to find alternatives

While these are still early days, investor enthusiasm around the fintech space, especially from global investors, could get dampened, fear industry executives.

BENGALURU: India’s financial services sector that had come to rely on Aadhaar for customer authentication is bracing for uncertain times following the Supreme Court’s restrictions on the use of the biometrics-based ID.

Although fintech companies as well as banks were expecting customers to be allowed to voluntarily share their Aadhaar numbers for e-verification, it is becoming clearer that the use of biometrics for authentication is a thing of the past, say industry executives. That’s forced them into a rush to find or create alternatives that won’t make verifying customers — a must for the industry — a tiresome and prohibitive exercise.

“All the efforts that banks put in linking Aadhaar numbers with bank accounts have gone in vain. And the cost that we had to bear is also a lost cause. But then, I am sure some new processes will evolve,” said a senior banker with a private sector lender.

Adding to the sector’s woes, investors are becoming weary of startups that leveraged the Aadhaar database to build customer profiles and sell services. A Bengaluru-based early-stage investor said his firm now has to re-evaluate its portfolio companies and figure how they can change their business models following the court’s verdict.

While these are still early days, investor enthusiasm around the fintech space, especially from global investors, could get dampened, fear industry executives.

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